US yields rise after better-than-expected economic data

NEW YORK – US Treasury yields gained on Thursday after data showing persistent strength in the labor market and business activity, reinforcing expectations that the Federal Reserve will take its time cutting interest rates this year.

The benchmark US 10-year yield climbed to a more than one-week peak of 4.498% and was last up 4.1 basis points (bps) at 4.474%.

US 30-year yields rose 3.1 bps to 4.580%.

On the front end of the curve, the US two-year yield, which reflects rate move expectations, climbed to a roughly three-week high of 4.959%. It was last up 5.5 bps at 4.933%.

US yields drifted lower before Thursday’s data as investors consolidated positions in a week generally viewed as thin on economic reports.

Initial claims for state unemployment benefits dropped 8,000 to a seasonally adjusted 215,000 for the week ended May 18, data showed. Economists polled by Reuters had forecast 220,000 claims in the latest week.

That was followed by a report showing US business activity accelerated to the highest in more than two years in May. S&P Global’s flash US Composite PMI Output Index, which tracks the manufacturing and services sectors, jumped to 54.4 this month, the highest since April 2022. That followed a final reading of 51.3 in April.

Manufacturers also reported higher prices for a range of inputs, suggesting goods inflation is likely to accelerate in the coming months.

“The S&P PMIs never really used to make a difference, then all of a sudden it did (on Thursday). The only thing I can think of is … the pick-up in manufacturing, which was a little bit more than the market expected,” said Ellis Phifer, managing director, fixed income capital markets at Raymond James in Memphis, Tennessee.

“I guess there has been a dearth of activity. There was not a lot of reaction to the jobless claims. But when you think about the better-than-expected claims on top of the PMIs, a bored market decided to make a move,” Phifer added.

US new home sales, meanwhile, slumped in April to a weaker-than-expected 634,000, weighed down by the rise in mortgage rates. April sales were the slowest in pace since November.

Following the reports, US rate futures priced in one rate cut of 25 basis points in 2024, most likely starting in September or November, according to LSEG’s rate probability app. For the last few weeks, the futures market had been comfortable factoring in about two cuts amid the gradual decline in inflation and other economic indicators.

The US yield curve, meanwhile, deepened its inversion. The spread between US two- and 10-year yields widened to as much as minus 47.7 bps on Thursday following the PMI report, the deepest inversion since March 12. The curve was last at minus 46 bps US2US10=TWEB, compared with minus 45.1 bps late on Wednesday.

The current curve is effectively a “bear flattener,” in which short-term interest rates are rising more quickly than longer-dated ones. This is a scenario associated with the market-reducing rate cut forecasts.

“Overall, we’re just in consolidation mode, awaiting critical inputs,” said Vail Hartman, US rates strategist at BMO Capital in New York. “The next important number is the core PCE (personal consumption expenditures), but we can argue that the market has a pretty good sense where that would come in, given CPI (consumer price index) earlier and other inflation numbers.”

Hartman noted that the next important indicator after the PCE would be nonfarm payrolls for May, which comes out on June 7.

Also on Thursday, the Treasury’s USD 16 billion auction of 10-year Treasury Inflation-Protected Securities (TIPS) was poorly received, suggesting investors expect price pressures will decline in the coming years. The high yield was 2.184%, higher than the expected rate at the bid deadline, which meant that investors demanded a premium to take down the note.

The bid-to-cover ratio, a gauge of demand, was 2.33, slightly lower than the previous auction’s 2.35, and the 2.40 average.

(Reporting by Gertrude Chavez-Dreyfuss; Editing by Chizu Nomiyama and Will Dunham)

Gold prices dip after record highs on profit taking, rate cut bets cool

Gold prices dipped over 1% on Wednesday as the gold rally cooled with investors booking profits, as traders pulled back from bets on Federal Reserve’s rate cuts this year.

Spot gold fell 1.8% to USD 2,377.43 per ounce by 1858 GMT. Prices had scaled a record high of USD 2,449.89 on Monday.

US gold futures settled 1.4% lower to USD 2,392.90. The US dollar index rose 0.3%, making bullion more expensive for other currency holders.

“You’re seeing some week-long liquidation, some profit taking by the shorter-term futures traders; all of which is not unusual in a market that hit a record high,” said Jim Wyckoff, senior analyst at Kitco Metals.

“Tomorrow’s gonna be an important trading day if the bulls need to bounce right back otherwise, there might be some near-term chart damage.”

Federal Reserve officials indicated that it would take longer than previously anticipated to gain greater confidence in inflation moving to 2%, according to the minutes of the US central bank’s April 30-May 1 session.

Bullion is also known as an inflation hedge, but the opportunity cost of holding this non-interest-bearing asset increases with higher interest rates.

Gold is also being held back by delayed rate cuts and unfulfilled recession fears along with selling by western investors, said Everett Millman, chief market analyst with Gainesville Coins.

Lately, economic data has pointed towards a downtrend in inflation, but US central bank policymakers said that the Fed should wait several more months to ensure that inflation really is back on track to its 2% target before cutting interest rates.

Spot silver fell over 3% to USD 30.84 per ounce, after hitting a more than 11-year high on Monday.

Platinum fell 0.9% to USD 1,036.80, and palladium dropped about 3% to USD 999.75.

(Reporting by Harshit Verma and Rahul Paswan in Bengaluru; Editing by Tasim Zahid and Shailesh Kuber)

Stocks fall after Fed minutes; Nvidia shares climb after the bell

NEW YORK – US stocks fell on Wednesday as investors digested minutes of the Federal Reserve’s most recent meeting but Nvidia’s shares rose about 6% after the close on the semiconductor bellwether’s stronger-than-expected revenue forecast.

The news also drove gains in other chipmakers.

Investors had focused on whether Nvidia’s first-quarter results could meet sky-high expectations and whether the outsized rally in artificial intelligence-related stocks could be sustained.

Nvidia shares, which had closed weaker, have surged about 90% this year after rocketing almost 240% in 2023.

“The markets are just waiting for Nvidia to make sure that even if they beat … what does it look like going forward and what is the forward-looking thinking with justifying where valuations are,” said Megan Horneman, chief investment officer at Verdance Capital Advisors in Hunt Valley, Maryland.

“It’s valuations that are more important so regardless of whether it’s a knee-jerk reaction to the upside or to the downside, when we start to parse through that earnings report and look at the valuation that some of these companies are asking for, is it too high?”

The Dow Jones Industrial Average fell 201.95 points, or 0.51%, to close at 39,671.04, the S&P 500 lost 14.40 points, or 0.27%, to 5,307.01 and the Nasdaq Composite dropped 31.08 points, or 0.18%, to 16,801.54.

Stocks struggled for direction for most of the session but weakened after minutes of the Fed’s meeting showed US central bank officials still had faith price pressures would ease, but slowly, due to disappointment over inflation readings.

The Fed’s April 30–May 1 meeting followed three straight months of data that showed sticky inflation, but before more recent reports that showed price pressures could be cooling again.

Stocks’ rally to record highs this month has been fueled in part by AI optimism, a solid earnings season and reignited hopes for rate cuts by the Fed this year.

Analysts polled by Reuters see the S&P 500 closing the year near current levels, at 5,302 points, but warned the index’s strong run means it risks a correction in the coming months.

Markets are pricing in a 59% chance of the Fed cutting rates by at least 25 basis points at its September meeting, down from 65.7% in the prior session, according to CME’s FedWatch Tool.

Chipmaker Analog Devices jumped 10.86% after forecasting third-quarter revenue above expectations.

Energy was the worst-performing sector, down 1.83% as oil prices fell for a third straight session.

Retailer Target tumbled 8.03% after its quarterly earnings and current-quarter forecast missed estimates.

TJ Maxx parent TJX gained 3.5% after raising its annual profit forecast.

Declining issues outnumbered advancers for a 2.75-to-1 ratio on the NYSE and a 1.5-to-1 ratio on the Nasdaq.

The S&P index recorded 47 new 52-week highs and six new lows, while the Nasdaq recorded 120 new highs and 109 new lows.

Volume on US exchanges was 12.86 billion shares, compared with the 12.01 billion average for the full session over the last 20 trading days.

(Reporting by Chuck Mikolajczak; Editing by Richard Chang)

Yields rise as Fed officials show concern about inflation

US Treasury yields rose on Wednesday after minutes from the Federal Reserve’s latest policy meeting showed central bank officials were concerned about higher inflation but still had faith that price pressures would ease, if slowly.

The Fed signaled at its April 30–May 1 meeting it is still leaning toward eventual reductions in borrowing costs but acknowledged that disappointing inflation readings in the first quarter could delay those rate cuts.

While the policy response for now would “involve maintaining” the Fed’s benchmark policy rate at its current level, the minutes released on Wednesday also reflected discussion of possible further hikes.

“The minutes appear to be a bit more hawkish than what we heard from (Fed Chair Jerome) Powell at the post meeting press conference,” said Subadra Rajappa, head of US rates strategy at Societe Generale in New York.

“They clearly seem to be concerned about inflation, they are much more open to perhaps hiking if needed,” Rajappa said. “This means higher for longer on policy.”

Data released since the Fed meeting have shown inflation cooling in April, with consumer prices rising less than expected and US job growth also slowing more than expected.

Fed policymakers in recent comments, however, have emphasized waiting several more months to ensure that inflation really is on track toward its 2% target before cutting rates.

“April payrolls and April CPI were two good data points for the rates market. However, the Fed has told us they need a good amount more data in order to be thinking about actual rate cuts, which makes sense given how strong the data was in the first quarter,” said Angelo Manolatos, macro strategist at Wells Fargo in New York.

Fed funds futures traders are pricing in 40 basis points of cuts by year-end, with the first cut seen possible in September.

With Fed policy now largely data-dependent, the market may be likely to consolidate as it waits for May’s jobs data and inflation readings.

The Fed will next meet on June 11-12 when it will update its economic and interest rate projections.

Benchmark 10-year note yields were last up 2 basis points at 4.434%

Interest rate sensitive two-year yields gained 5 basis points to 4.8796%.

The inversion in the yield curve two- and 10-year maturities widened around 3 basis points to minus 45 basis points, the deepest since April 10.

Yields rose earlier on Wednesday in line with those on European government debt after data showed that UK inflation eased less than expected and a key core measure of prices barely dropped.

British Prime Minister Rishi Sunak also called a national election on Wednesday for July 4.

The Treasury Department sold USD 16 billion in 20-year bonds on Wednesday at a high yield of 4.635%, close to where it had traded before the auction. The bid-to-cover ratio was 2.51 times, the lowest since February.

The Treasury will also sell USD 16 billion in 10-year Treasury Inflation-Protected Securities (TIPS) on Thursday.

(Reporting by Karen Brettell; Editing by Christina Fincher and Richard Chang)

Bank of Korea next up, Nvidia keeps on rollin’

Asian markets could be delicately poised at the open on Thursday, with growing worries over how soon US and global interest rates will come down offset by a potential boost from AI and chip-making giant Nvidia’s earnings late on Wednesday.

Nvidia shares jumped as much as 5% in after-hours trading immediately after its first-quarter results were published, but quickly gave back a chunk of that in choppy trading. US futures turned negative, pointing to a lower open on Thursday.

Nvidia reported stronger-than-expected Q1 earnings, forecast Q2 revenues above estimates, and announced a ten-for-one forward stock split effective June 7.

If investors decide they like what they see from Nvidia’s results and earnings call, a brighter trading day on Thursday beckons.

In Asia, the calendar is dominated by a Bank of Korea policy decision, PMIs from Australia and India, inflation figures from Singapore and Hong Kong, and Singapore’s Q1 GDP.

The Bank of Korea is expected to keep its key policy rate unchanged at 3.50% for an 11th straight meeting, a Reuters poll showed, then cut by 50 basis points in the fourth quarter after the likely start of policy easing from global peers.

Trading in Japanese bonds and the yen is stirring again, which is likely to cause Bank of Japan officials some degree of discomfort – the yen is weakening even though yields are rising.

The 10-year JGB yield hit 1.00% on Wednesday for the first time in 11 years amid mounting bets for further BOJ policy tightening this year, while a weak auction of 40-year debt added to the pressure for higher yields.

The two-year yield printed a fresh 15-year peak of 0.35%.

Yet the yen fell, nearing 157.00 against the US dollar and printing a 17-year high against the New Zealand dollar after the Reserve Bank of New Zealand struck a surprisingly hawkish tone in keeping interest rates on hold.

US bond yields are also ticking higher too, after minutes of the Fed’s last policy meeting released on Wednesday showed that officials still expect inflation to return to their 2% target over the medium term, but “the disinflation would likely take longer than previously thought.”

Goldman Sachs CEO David Solomon joined the small but growing band that thinks the Fed won’t cut rates at all this year.

Meanwhile, the US-China trade war will start hitting the headlines ahead of the G7 meeting in Italy later this week, where officials will push back on China’s growing export strength in key sectors.

The United States is not calling on its partners to slap tariffs on Chinese imports, but will want the G7 communique to express common concern for what it calls Beijing’s industrial “overcapacity”.

Here are key developments that could provide more direction to markets on Wednesday:

– South Korea monetary policy decision

– Singapore, Hong Kong CPI inflation (April)

– Japan, Australia, India PMIs (May)

(Reporting by Jamie McGeever; Editing by Josie Kao)

S&P 500 to end 2024 around current levels after strong run

NEW YORK – The Standard & Poor’s 500 will end the year near current levels, but strong stock market gains so far in 2024 have some strategists saying the index is at risk of a correction in coming months, according to a Reuters poll released Wednesday.

By year-end, the benchmark index will be at 5,302, according to the median forecast of 50 strategists polled May 13-22. That is slightly below Tuesday’s close of 5,321.41.

That latest prediction is still above the 5,100 year-end level forecast in a Reuters poll in February.

The S&P 500 has gained over 11% so far this year and all three major US stock indexes have risen to records recently, thanks in part to economic data that has eased inflation concerns, fuelling bets that the Federal Reserve will start cutting interest rates later in the year.

The poll has the Dow Jones industrial average finishing this year at 40,765 after the index crossed the 40,000 level for the first time last week and closed Tuesday at 39,872.99.

While Federal Reserve officials have hinted US interest rates may not fall anytime soon, many investors still expect the Fed will be able to cut rates twice this year.

Strategists who answered an additional question were almost evenly split on whether a correction was likely in US stocks over the next three months. Eight of 15 respondents said a correction was unlikely, while seven said it was likely.

“Most of the gains have already been gotten,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut, who still sees the S&P 500 climbing a bit further to end the year at 5,575.

With the Fed, he said, “my sense is they don’t let us down, meaning they cut rates” this year.

Projections for strong earnings are a positive. Analysts expect overall S&P 500 earnings to rise 10.4% in 2024, LSEG data showed.

But stocks are also at high valuation levels. The S&P 500 trades at a forward price-to-earnings ratio – a commonly used metric to value stocks – of 20.9, well above the index’s historic average of 15.7, according to LSEG Datastream.

Evercore ISI, which has a 4,750 year-end forecast for the S&P 500, expects US earnings estimates to weaken.

“Given the slowing in the economy – and it’s not rampant slowing but noticeable – it creates a greater probability that earnings estimates are just too optimistic,” said Julian Emanuel, Evercore ISI’s senior managing director for equity, derivatives and quantitative strategy.

He added: “It wouldn’t be an issue if it wasn’t for the fact that valuations are where they are.”

Investors are keen to see whether the market can sustain its gains tied to optimism over artificial intelligence developments.

All eyes will be on AI chip leader Nvidia when it reports quarterly results after the closing bell on Wednesday.

(Reporting by Caroline Valetkevitch; additional reporting by Chuck Mikolajczak, Stephen Culp, Sinead Carew, and Chibuike Oguh in New York; additional polling by Pranoy Krishna, Indradip Ghosh, Mumal Rathore, and Purujit Arun in Bengaluru; Editing by Kim Coghill)

Oil slips for a third straight day on prospect of US rates staying high

NEW YORK – Oil prices fell more than 1% on Wednesday, retreating for a third straight day, as Fed officials rekindled worries about oil demand when they indicated interest rate cuts might be deferred due to sustained inflation.

Brent crude futures settled 98 cents lower, or 1.18%, at USD 81.90 a barrel. US West Texas Intermediate crude (WTI) was down USD 1.09, or 1.39%, to USD 77.57. Both benchmarks settled about 1% lower on Tuesday.

Federal Reserve officials at their last policy meeting indicated inflation could take longer to ease than previously thought, minutes of the Federal Reserve’s May policy-setting meeting, released on Wednesday, showed.

Lower interest rates reduce borrowing costs, freeing up funds that could boost economic growth and demand for oil.

“I wouldn’t expect rate cuts to come before one of the fall meetings,” said John Kilduff of Again Capital.

Also in the US, Energy Information Administration said crude stocks rose by 1.8 million barrels during the week ended May 17. That compares with a 2.5-million-barrel draw analysts forecast in a Reuters poll and a 2.48-million-barrel rise shown in the data from the American Petroleum Institute (API), an industry group.

“There was strong demand from refiners for crude oil and the gasoline demand was one of the highest we’ve seen in quite some time,” Kilduff said. Part of that demand increase was due to pre-Memorial Day weekend stockpiling by suppliers, he noted.

Crude markets have been pressured by weakening fundamentals, such as falling spot Brent over futures and softer refinery margins. This will likely force OPEC+ to extend production cuts at its June meeting to support prices, according to Ole Hansen, Saxo Bank’s head of commodity strategy.

Physical crude markets have been weakening. In another sign that concern of tight prompt supply is easing, the premium of Brent’s first-month contract over the second, known as backwardation, is close to its lowest since January.

“The view on the fundamental outlook remains grim,” said Tamas Varga, an analyst with oil broker PVM.

(Reporting by Nicole Jao; Additional reporting by Alex Lawler, Deep Vakil, and Sudarshan Varadhan; Editing by Jan Harvey, Will Dunham, Mark Potter, Leslie Adler, and David Gregorio)

Oil falls 1% on sticky US inflation, dampened geopolitical risk premium

HOUSTON – Oil prices settled 1% lower on Tuesday as lingering US inflation looked likely to keep interest rates higher for longer, weighing on fuel demand.

Brent crude futures settled down 83 cents, or 1%, to USD 82.88 a barrel. US West Texas Intermediate crude (WTI) futures for June, which expired on Tuesday, slipped by 54 cents, or 0.7%, to USD 79.26.

The more active July contract settled down 64 cents, at USD 78.66.

Higher borrowing costs can slow economic growth and pressure oil demand.

“The market is very focused on gasoline demand in the US because there are signs that consumers are cutting back because of inflation. Unless that turns around, the market is suggesting things could be a little bleak,” said Phil Flynn, an analyst at Price Futures Group.

Ahead of this weekend’s Memorial Day holiday, which kicks off the US peak summer driving season, retail gasoline prices fell for the fourth consecutive week to USD 3.58 per gallon on Monday, the Energy Information Administration (EIA) said in its gasoline and diesel fuel update.

The US will sell the nearly 1 million barrels of gasoline in a reserve in northeastern states, with bids due on May 28, the Department of Energy said on Tuesday.

US diesel prices have also slipped, according to the EIA, down 5.9 cents on the week on Monday, at USD 3.89 per gallon. Diesel is a key refined product for both the industrial sector and transport.

Investors are awaiting minutes from the Fed’s last policy meeting due on Wednesday, as well as weekly US oil inventory data from the EIA, also due on Wednesday.

“There is nothing in the market right now that is pushing prices higher. If we see a little bit of a stock draw tomorrow that may help push prices back up into the USD 78.50-USD 80 per barrel range,” said Tim Snyder, economist at Matador Economics.

US crude oil and gasoline inventories rose last week, while distillates fell, according to market sources citing American Petroleum Institute (API) figures on Tuesday.

The API figures showed crude stocks were up by 2.48 million barrels in the week ended May 17, the sources said on condition of anonymity. Gasoline inventories rose by 2.1 million barrels, and distillates fell by 320,000 barrels.

Two Federal Reserve policymakers on Tuesday said it was prudent for the US central bank to wait several more months to ensure that inflation is back on a path to the 2% target before commencing interest rate cuts.

The economic outlook in Europe is more positive. European Central Bank President Christine Lagarde said in an interview she was “really confident” that eurozone inflation is under control. The ECB has all but promised a rate cut on June 6, so policymakers have shifted their attention to debating where rates will go thereafter.

The market appeared largely unaffected by the death of Iranian President Ebrahim Raisi, a hardliner and potential successor to Supreme Leader Ayatollah Ali Khamenei, in a helicopter crash on Sunday.

The structure of the Brent contract is weakening in an indication of a softer market and strong supply.

The front-month Brent contract’s premium to the second-month contract narrowed to 10 cents, its weakest since January.

(Reporting by Georgina McCartney in Houston, Noah Browning; Additional reporting by Deep Vakil in Bengaluru, Yuka Obayashi in Tokyo, and Trixie Yap in Singapore; Editing by David Goodman, Marguerita Choy, Bill Berkrot, Kevin Liffey, and David Gregorio)

Dollar firm as Fed officials urge patience on rate cuts

NEW YORK – The US dollar edged up against the euro on Tuesday, as Federal Reserve policymakers said it is prudent for the US central bank to wait several more months to ensure that inflation really is back on a path to the 2% target before commencing interest rate cuts.

Against other currencies, the greenback was mostly flat ahead of the US Memorial Day holiday next week.

“Amid a paucity of economic data catalysts this week, trading ranges have narrowed across currency markets. The dollar remains on a solid footing however, bolstered by a drumbeat of high-for-long messages from Fed officials,” said Karl Schamotta, chief market strategist, at Corpay in Toronto.

Fed Governor Christopher Waller told the Peterson Institute for International Economics in Washington, on Tuesday, he would need to see several more months of good inflation data before he would be comfortable supporting an easing in the stance of monetary policy.

Waller, however, did put a pin in any speculation that interest rates may need to rise again for demand to soften enough to ease price pressures further, saying the latest inflation data is “reassuring” and the probability of a rate hike is “very low.”

Atlanta Fed Chair Raphael Bostic also spoke on Tuesday and warned against cutting rates too quickly. The Fed, he said, needs to be cautious about approving its first rate cut to be sure it does not touch off pent-up spending among businesses and households, and put the central bank in a position where inflation starts “bouncing around.”

“Fed speakers are driving the market – and they, so far, haven’t said anything traders didn’t expect,” said Helen Given, FX trader, at Monex USA in Washington.

“Barring a surprise from the FOMC (Federal Open Market Committee) minutes tomorrow afternoon, it’s likely that this could stay a fairly quiet week.”

Fed Chair Jerome Powell, in his press briefing after the Fed held rates steady earlier this month, also ruled out rate hikes.

“What that does is it takes out the tail-risk scenario that the Fed is still thinking about hikes because they are effectively questioning their assumption that rates are restrictive enough,” said Vishal Khanduja, co-head of Broad Markets Fixed Income at Morgan Stanley Investment Management.

The euro was 0.05% lower at USD 1.0852.

Investors will be watching Thursday’s data from the European Central Bank negotiated wage tracker and the euro zone Purchasing Managers’ Index which could provide further clues about the monetary cycle in the euro area.

On Tuesday, the US currency slipped 0.04% against the Japanese yen to 156.20.

This dollar-yen pair has moved in tight ranges in the past couple of trading days after a tumultuous start to May in the wake of suspected rounds of currency interventions by Tokyo to prop up the yen.

Fears of intervention from Japanese authorities have deterred traders from pushing the yen to new lows. The yen dropped to more than 160 per dollar on April 29, its weakest in 34 years.

CRYPTO GAINS

In cryptocurrencies, ether was set for its largest two-day gain in nearly two years and bitcoin approached a record high on speculation about the outcome of applications for US spot exchange-traded funds that would track the world’s second-biggest cryptocurrency.

Ether was 6.5% higher at USD 3,728.70 after earlier hitting USD 3,838.80, its highest level since mid-March. It surged nearly 14% in the previous session – its largest daily percentage gain since November 2022.

Bitcoin broke above the USD 70,000 level and was last trading up 0.25% higher at USD 69,707. It hit its all-time high at USD 73,803.25 in March.

(Reporting by Gertrude Chavez-Dreyfuss in New York and Stefano Rebaudo in Milan; Additional reporting by Rae Wee in Singapore; Editing by Susan Fenton, Alison Williams, and Sandra Maler)

Two US asset managers launch weight-loss ETFs

Two separate asset-management firms announced the debut of exchange-traded funds (ETFs) on Tuesday, both of which are designed to give investors exposure to stocks like Eli Lilly & Co. and Novo Nordisk which are pioneers in developing new anti-obesity drugs.

Amplify ETFs said its Amplify Weight Loss Drug & Treatment ETF will track the VettaFi Weight Loss Drug & Treatment Index, while the Roundhill GLP-1 & Weight Loss ETF will be actively managed by the team at Roundhill Investments.

The two products take slightly different approaches to building a portfolio around the new category of medications to treat obesity, known as glucagon-like peptide-1 or GLP-1 drugs. Roundhill plans to focus squarely on pharmaceutical companies developing new drug therapies, while Amplify will include a 30% weighting to companies involved in related businesses, such as manufacturing, analysis, or distribution of these medications.

The number of ETFs targeting this booming segment of the pharmaceutical market appears to be exploding. In early 2020, Janus Henderson closed its own obesity-focused ETF, leaving investors with only broader pharmaceutical or healthcare fund options. But last month, Tema, another niche asset manager, re-branded and re-launched a five-month-old ETF investing in stocks targeting cardiovascular and metabolic health. The more narrowly focused Tema Obesity and Cardiometabolic ETF has added more than USD 63 million since then.

It remains to be seen how long investors remain enthusiastic about ETFs tied to this particular trend, however. In the first four months of this year, ETFs designed to appeal to investors keeping tabs on trends like cybersecurity, working from home, pet care, or cannabis have recorded outflows of USD 2.4 billion, compared with outflows of USD 4.9 billion in 2023.

(Reporting by Suzanne McGee in Providence, Rhode Island; Editing by Matthew Lewis)

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